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2.Globaliza4onofmarketsinterna4onaliza4onofthefirm

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2.Whatcanyouexpecttoday

TheBangalore,IndiastoryComparisontoSiliconValley WhyGlobaliza4onisnotanewphenomenon TheframeworkofGlobaliza4on DimensionsofGlobaliza4on DriversformarketGlobaliza4on TechnologicaladvancesofGlobaliza4on SocietalconsequencesofGlobaliza4on Interna4onaliza4onofthefirmsvaluechain Casestudy:Diverseperspec4vesonGlobaliza4onofmarkets

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2.1Bangalore:TheNewSiliconValley

Bangalore,thecity LifeinBangalore MyjobinAccenture TheimpactonIndiansociety Educa4on Jobsearchandworkmobility Opportuni4esforaninterna4onalcareer Secondaryandter4aryeffectsofsectorspecificgrowth

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2.2Globaliza4onofmarkets

Globaliza4onreferstothegradualintegra4onandgrowinginterdependenceofna4onaleconomies

allowsfirmstoviewtheworldasanintegratedmarketplace Ini4almeaningwasabouttheemergenceofglobalmarketsforstandardizedproductsandservicesandthegrowthofworld-

scalecompaniesthatservethosemarkets Broadermeaning:Interconnectednessofna4onaleconomiesandinterdependenceof

Buyers Producers Suppliers Governments

30 - 31

Practical meaning?

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2.3Globaliza4onisnonewphenomenon

Advancedtechnologieshaveacceleratedthepaceofglobaliza4on

Earlyciviliza4onshavealreadyengagedinac4vi4esthatcanbeconsideredGlobaliza4on

PhasesofGlobaliza4on

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18301880

Railroads/ocean

transport

19001930

Electricity&steel

produc4on

1981970

GATT&PostWW2

1980present

IT/Telecoms,

manufacturing,

logis4cs,priva4za4on

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2.Ongoingframeworkformarketglobaliza4on

1. Driversformarketglobaliza4on2. Dimensionsofmarketglobaliza4on3. Societalconsequencesofmarketglobaliza4on. Firm-levelconsequencesofmarketglobaliza4on:

Interna4onaliza4onofthefirmsvaluechain

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2..1Driversformarketglobaliza4on

Worldwidereduc4onofbarrierstotradeandinvestment Na4onalgovernmentsreducingbarriershelpstrade Importtaxesonautomobiles,industrialmachinery,etc.havemovedtozero

AidedbytheWTO Marketliberaliza4on EaseofFDI Easingofstrategicsectors

Industrializa4on,economicdevelopmentandmoderniza4on Advancementofemergingmarketeconomies Movefromlowvalue-addingtohigherelementsofthevaluechains

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2..1Driversformarketglobaliza4on

Integra4onofworldfinancialmarkets Interna4onalfirmshaveeasieraccesstocapital,borrowfunds,foreignexchangetransac4ons

Advancesintechnology Informa4ontechnology Communica4ons Manufacturing Transporta4on

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2..2Dimensionsofmarketglobaliza4on

Mul4pledimensionsofmarketglobaliza4on Economics History Anthropology

Interna4onalbusiness Consequenceofeconomic,technological,andgovernmentpolicytrends

Driverofeconomic,poli4calandsocialphenomena Driverandconsequenceoffirm-levelinterna4onaliza4on

35 - 36

Poli4calscience Sociology Technology

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2..2.1Integra4on/interdependenceofnat.

economies

Devisemul4-countryopera4onsthrough Trade Investment Geographicdispersalofcompanyresources Integra4onandcoordina4onofvalue-chainac4vity

Harmoniza4onofmonetaryandfiscalpolicies Deviseandsupervisesuprana4onalins4tu4ons WorldBankIMF

WTO

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2..2.2Riseofna4onaleconomicintegra4onblocs

Sincethe1950emergenceofregionaleconomicintegra4onblocs EU NAFTA APEC Mercosur

36

Different degrees of regulation/cooperation

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2..2.3Growthofglobalinvestment/financialflows

Freemovementofcapitalextendseconomicac4vityaroundtheglobeandstrengthensinterconnectedness

Commercialandinvestmentbankingisaglobalindustry Foreignbondsrepresentmajorsourceofdebtfinancing Forgovernments Forcompanies

Facilita4onoffinancialtransac4onsthroughinforma4onandtelecommunica4onstechnology

Thisinterconnectednessbetweeneconomiesisadouble-sidedsword

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2..2.Convergenceofconsumerlifestyle/preferences

Convergenceofvaluessurrounding Use/importanceofmoneyand4me Congruenceofpurchasingpriori4es Increasingoverlapofentertainmentpreferences

36

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2..2.5Globaliza4onofproduc4on

Reducingcostsforproduc4onandmarke4ng Crea4onofeconomiesofscaleandstandardiza4on Exploita4onofexis4ngregionaldifferencesandgainingcompe44veadvantage

Differentstrategies Movingproduc4ontolow-costloca4ons Follow-the-sun(servicesector) Availabilityoftalent

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2..3Societalconsequencesofmarketglobaliza4on

Everycoinhastwosidesadoublesidedsword Posi4veresults Nega4veconsequences Lossofna4onalsovereignitytheabilityofana4ontogovernitsownaffairs(i.e.Greece)

Off-shoringandflightofjobs Effectsonthepoor Effectsonthena4onalenvironment Effectonna4onalculture

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2..3.1Lossofna4onalsovereignity

Theabilityofana4ontogovernitsownaffairs(i.e.Greece) Lossofcontrolofeconomies,socialstructures,poli4calsystems

MNCac4vitycaninterferewithsuchsovereignityconcerns i.e.Wal-MartsrevenueislargerthantheGDPofmostna4ons

Israel,Greece,Portugal Bigcompanieslobbyandexercisepressureongovernments Na4onalinterestistradedforprofitsshort-termgoal Externaliza4onofcoststothepublic

Rarecaseofacountrywithstanding:USA Sarbanes-OxleyAct(2002):Truthfulfinancialrepor4ng

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2..3.2Off-shoringandtheflightofjobs

WhileGlobaliza4onhascreatedcountlessjobsallovertheworld Manypeopleindevelopedna4onslosttheirjob Developedna4onsgovernmentsonlyinsufficientlycompensatedfortheweakeningofitssocialstructures

Followtheprofit Higherworkinghourselsewhere Lowerpriceoflabor Off-shoring:Reloca4onofmanufacturingandothervalue-chainac4vi4estocost-effec4veloca4onsabroad

Followthebestprice 19601970:USandEuropeanmanufacturing 1990:Movementofservicesectorjobs Followweakerlegisla4onimpactontheenvironment,reducedlaborprotec4onelsewhere

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2..3.3Effectonthepoor

Money-oriented,short-termgoalsofcompaniesthreatenspeople: Lowwages,exploita4on,childlabor,health&safetyissues 250millionchildrenatworkworldwide Sweatshopcondi4ons Exploita4onbasedonnon-availabilityofwork Coopera4onofcountrieseliteswithsuchprac4ces Companiesengageinsustaininglowdevelopmentlevels Vietnam:Developmentofthefootwearindustryhascontributedtofive-foldriseinsalaries

Sustainabilitythreatenedbycompaniesmovingtothenextcheaperloca4on

Alterna4vemeasurestobetakentocompensate SecurityofFDI Privatecapital Infrastructure

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2..3.Effectonthenaturalenvironment

Increasedmanufacturingandserviceprovisioningresultsin Higherpollu4on Habitatdestruc4on Deteriora4onoftheozonelayer

FDI,becauseofnon-voluntaryadherencetodevelopedna4onsstandards,threatensthesustainabilityoftheplanetforthegain

ofmoreprofit Governmentswanttobearac4vetoFDIandvolunteer Legisla4onisonlyapartlyanswertotheproblem Moreethosisrequiredfromcompanies Ethicalbehavior Longer-termorienta4onofstakeholders

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2..3.5Effectonna4onalculture

Globaliza4onreshapesna4onalculture Convergencedivergence:unpredictableeffects India:Bangaloreexamplesuggeststhattheposi4veeffectsofjobgainscomeatapricethattheconstructoffamilychangesfromlargefamiliestonuclearfamilies

Lifestyle,thoughoendesired,resultsindifferentspendingbehavioryoungpeopleengagingindebtspending

Globaliza4onofworkprocessesandbehaviors Western,moreprosperouslifestylechangesdemographics Conflictbetweentradi4onalandmodernvalues Increasedreligiousconflicts Commonworkplacelanguage,whileenablerisexcludingotherpeoplefrompar4cipa4oninthedevelopment

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2...1Firm-levelconsequences:Thevaluechain

Firmsareexposedtonewandmorefar-reachingrisksandrivalryfromcompe4tors Moredemandingconsumers,lesscustomerloyalty Customersdemandworld-widewarrantyandservice Proac4velyinterna4onalizevaluechain Globalsourcing Expor4ng Keyinvestments

Coopera4oninR&Dandtechnologytransfer(i.e.China) Upstream(R&Dandproduc4oninon-shoreloca4ons) Downstream(Marke4ng&Salesinoff-shoreloca4ons) Interna4onaliza4oniscalledoff-shoring

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2...2Thevaluechain

52

R&D Sourcing ManufacturingMarke4ng Distribu4onSales&Service

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2.5Casestudy:Diverseperspec4vesonglobaliza4on

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3Outlookfortomorrow

3.Organiza4onalpar4cipantsandinterna4onalbusiness Bornglobalfirms Threetypesofpar4cipantsininterna4onalbusiness Par4cipantsorganizedbyvalue-chainac4vity Focalfirmsininterna4onalbusiness Foreignmarketentrystrategiesoffocalfirms Distribu4onchannelintermediariesininterna4onalbusiness Globaltrend:Onlineretailers Casestudy:DHLInterna4onal Readingrequiredofpages6087